Y Combinator's SAFE
Y Combinator's Simple Agreement for Future Equity (SAFE) is a widely used contract in the startup community, particularly in Silicon Valley and other startup communities around the world. SAFE is a simple agreement that was created by Y Combinator in the United States. It provides a framework for investors to invest in early-stage startups in exchange for the right to acquire future shares in the company. The SAFE is designed to be founder-friendly and investor-friendly, striking a balance between the two parties. It allows startups to raise capital without having to determine an immediate valuation, which can be challenging in the early stages. Instead, the valuation is determined at a later financing round, when the company has more established metrics. Under the terms of the SAFE, investors provide funding to the startup, and in return, they receive the right to acquire shares in the future. This means that the investor's investment is converted into equity when certain triggering events occur, such as a subsequent financing round or a liquidity event. The SAFE is a flexible instrument that can be customized to meet the specific needs of the startup and the investor. It provides a way for startups to raise capital quickly and efficiently, while also providing investors with the potential for future returns. For beginners who want to understand the Y Combinator SAFE in an easy-to-understand way, you can refer to this article on . It provides a comprehensive explanation of the Y Combinator SAFE and its significance in the startup ecosystem.